Bupa announces 2022 financial results

^{*Underlying profit includes $118m of undistributed health insurance claims savings related to COVID-19. This is intended to be returned to Australian health insurance customers in line with our commitments to not benefit from COVID-19. 2023 health insurance underlying profit will be reduced accordingly.}

Bupa Asia Pacific (APAC) has today announced it will further defer its 2023 premium increase until October 2023 saving customers an extra $79 million as it releases its 2022 financial results with a focus on delivering value and support for its customers and residents.

Against a backdrop of cost of living and inflationary pressures, Bupa has continued to prioritise supporting customers and putting in place new initiatives to keep healthcare and health insurance affordable.

As more people continue to prioritise their health and wellbeing following the COVID-19 pandemic, Bupa Health Insurance saw an 4.2% increase in customer growth in 2022 taking its total customer base to 4.1 million customers.

Bupa also paid out $5.7 billion in hospital and ancillary claims across its domestic and international portfolios last year, among the highest of major insurers.

In announcing an additional $79 million premium deferral today, on top of the $75 million in customer support already announced in December last year, Bupa members’ premium changes will be deferred for six months until 1 October saving health insurance members $154 million.

Bupa’s reported financial results show revenue declined marginally, largely driven by $558 million returned to Australian health insurance customers in 2022 through cashbacks and premium deferrals (2021: $120m). Excluding the impact of COVID-19 support packages, revenue increased 3% year-on-year.

Underlying profit increased to $537 million; excluding $118 million of undistributed health insurance claims savings related to COVID-19, profit increased by 3%. 

This was driven by improved gross margin in Australian Health Insurance, lower costs in Australian Health Services and strong performance in Hong Kong Health Services. Impacts from the pandemic led to reduced profits in Australian and New Zealand aged care, due to lower occupancy and increased labour costs.

Bupa Asia Pacific Chief Executive Officer, Hisham El-Ansary, said: “Our total announced customer support since the pandemic started is now close to $1 billion through cashbacks, premium deferrals, financial assistance for impacted customers and other support programs.

Mr El-Ansary said Bupa remained committed to supporting customers and residents as their health and care partner.

“As we emerged from the most challenging health crisis of our time, we now  face uncertain global and local economic conditions,” he said.

“In aged care, we remain focused on continually improving the level of care we offer our residents. We look forward to implementing key reforms to be introduced by the Federal Government during 2023, including aged care standards and the wage increase for aged care workers.”

Mr El-Ansary, who will step down as Bupa APAC CEO at the end of this month, thanked the millions of customers and residents who put their trust in Bupa to support their health journey and care needs.

“It’s been an enormous privilege to lead the Bupa APAC team. While we’ve made good progress in meeting the ever-changing needs of our customers, we know there will always be more work to do. I look forward to watching Bupa continue to thrive” he said.

Health Insurance

In our Australian Health Insurance business, when excluding the undistributed COVID-19 claims savings, underlying performance was driven by customer growth, an enhanced portfolio mix and continued business transformation initiatives.

Mr El-Ansary said: “We have one of the largest hospital networks of any major health fund which gives our members peace of mind they’ll be covered without additional out-of-pocket costs when they receive treatment. As the pandemic shifted people’s mindset about how they want to receive their treatment, our investments in new and innovative models of care including virtual and digital care, rehab in the home and chemo in the home are increasingly giving members a more personalised and connected health journey.

“We witnessed the acceleration of digital health during the pandemic. We know that telehealth is here to stay as it meets the needs of consumers, complementing in-person consultations and providing greater access to doctors and health professionals. That’s why we’re continuing to develop Blua and exploring new virtual and at-home propositions for our customers.”

Health Services

In Australian Health Services, revenue declined due to the divestment of our dental practices in New Zealand and clinician vacancies. This was partially offset by new business revenue and growth in medical assessment volumes as COVID-19 lockdown backlogs were cleared. Underlying profit improved, driven by lower operating costs and increased customer demand for optical and hearing services.

Mr El-Ansary said: “Bupa Dental Care is investing in exciting initiatives including programs dedicated to graduates, mentoring and future leaders, as well as opportunities to upskill on the latest technologies making Bupa a great place to work”

Aged Care and Villages - Australia

In Australian Villages and Aged Care, revenue and underlying performance declined. This was largely due to COVID-19 restrictions which contributed to workforce challenges and constrained admissions, as well as the sale or closure of nine homes in 2021. Closing occupancy was 84% (2021: 87%). Higher labour, infection prevention and control costs also contributed to the decreases.

Mr El-Ansary said: “A sector-wide workforce shortage remains the key challenge, with an estimated 35,000 vacant roles across the aged sector. These workforce pressures have an impact on occupancy, particularly in regionally based homes.

“We have put in place several workforce initiatives to mitigate these pressures including carer traineeships, our registered nurses graduate program and our overseas nurses’ program, which has recently taken in its first group of nurses.

“As the Government has recognised, addressing the significant workforce shortage today and making a career in aged care attractive for the next generation, requires a broad suite of reforms and Bupa welcomes the opportunity to contribute.”

Aged Care and Villages – New Zealand

In New Zealand Villages and Aged Care, revenue was broadly in line with 2021 as new developments and government funding increases offset divestments and site closures. Underlying profit decreased primarily due to the impact of COVID-19 on occupancy, as well as higher labour costs. As part of continued portfolio optimisation, we opened a new retirement village and adjacent care home and closed three care homes. Closing occupancy was 87% (2021: 88%).

Mr El-Ansary said: “In New Zealand, our underlying profit was lower in 2022 due to higher agency labour costs caused by employee shortages, higher PPE expenses and inflation, alongside reduced occupancy rates from COVID-19 restrictions. Some encouraging signs of recovery were noted in the last quarter”

Hong Kong

In Hong Kong SAR, revenue increased due to various factors including strong COVID-19 vaccination clinic volumes. We provided more than 12,500 virtual consultations and opened seven new medical and dental centres. This was despite the COVID-19 restrictions in place during the first half of the year and visitor entry restrictions remaining for most of the year. Underlying profit was significantly impacted by a rebound in insurance claims following COVID-19 lockdowns in the second half of 2022.

Mr El-Ansary said: “Despite the challenging operating environment in Hong Kong, we have made significant investments in the transformation agenda, which futureproofs our businesses and enables a digitally enhanced online to offline experience.”